March 6, 2017

The total inflation in the US currency from 1913, when the Federal Reserve System was established, until now, 2017, is a remarkable 2352.9%! Therefore, the Federal Reserve System has been an utter failure. It’s thus obvious that the theories and equations utilized by the Fed are dead wrong. Even today, the staff of the Fed consists mostly of Keynesian or neo-Keynesian fools, like Janet Yellen and Thomas Lubik, among others. These individuals believe that interest rates can be artificially set by the Fed to control the economy–but this causes the misallocation of capital. What the Fed should be doing is to control the quantity of currency in circulation (by buying back bonds from the public or selling bonds to the public) so as to keep the price level perfectly stable. But their theories do not tell them how to do this properly!

The true theory of economics is Larsonian econophysics. Dr. Satz’s paper, “Theory of Microeconomics and Macroeconomics: Larsonian Econophysics,” provides a detailed, computational version of this theory, written in Mathcad. For the first time in economics, an explicit equation is derived to calculate the change in circulating currency to keep the average price level constant. This paper is available as a free PDF at http://www.reciprocalsystem.guru; scroll down to the econophysics section to obtain it. After you study this paper, you will no longer take seriously the pronouncements of the Fed, and you will understand precisely how the economy actually works–and how to make it work better!